Weekly Recap - The Dow Hit 50K. The Nasdaq Didn't Get Invited

Last week was two different markets wearing the same trench coat pretending to be one economy.

Monday opened hot. ISM Manufacturing at 52.6%, snapping an eleven-month contraction streak, had bulls chest-bumping in the pre-market as they'd just discovered fire. Then earnings season showed up. By Thursday, mega-cap tech had pushed the Nasdaq below its 50-day moving average and into negative year-to-date territory. Bitcoin was cratering. The VIX blew past 21. Your portfolio looked like a crime scene with better lighting.

Friday staged a rally sharp enough to push the Dow above 50,000 for the first time in history. Historic. Iconic. Also, not enough to fix anything that actually broke. The S&P 500 closed the week flat. The Nasdaq lost 1.8%.

Think about that. The Dow hit a milestone, and the Nasdaq still lost money. That's not a market. That's a custody battle.

The divergence this week wasn't subtle. It was a divorce filing.

The Dow surged 2.5% to close at 50,115.67, its first close above 50K ever. The S&P 500 slipped 0.1% to 6,932.30. The Nasdaq shed 1.8% to 23,031.21. Same week. Same economy. Completely different vibes.

Small and mid-caps, the stocks nobody talks about at cocktail parties, quietly crushed it. Russell 2000 rose 2.2%. S&P Mid Cap 400 gained 4.4%. Year-to-date leads of +7.6% and +8.5%, respectively. Turns out you don't need a $200 billion capex fantasy to have a good quarter. You just need revenue. Revolutionary concept.

Sector winners: consumer staples (+6.0%), industrials (+4.7%), energy (+4.3%). Translation: boring won. Sector losers: consumer discretionary (-4.6%), communication services (-4.4%). Translation: anything adjacent to mega-cap tech got kneecapped.

Treasuries rallied modestly; 10-year yield dipped 3 bps to 4.21%, 2-year fell 3 bps to 3.51%. Investors rotated toward safety like passengers moving to the exit row mid-flight.

If this week were a person, it would be wearing half a tuxedo and half gym clothes to brunch, then ordering shots before anyone else had water. Technically functional. Spiritually unwell.

Here's what actually happened: Anthropic launched Opus 4.6 and new enterprise tools. Traders panicked. Software stocks collapsed. They called it the "SaaSpocalypse."

ServiceNow. Salesforce. SAP. All of them tumbling as investors suddenly asked the question these companies have been dodging for two years: what if AI just replaces the middleman you built an empire on?

The iShares Expanded Tech-Software ETF cratered 8.7% in a single week. One of the worst stretches for enterprise software in recent memory. SaaS CEOs are updating their LinkedIn bios as we speak. "Open to opportunities" energy.

NVIDIA's Jensen Huang tried to do damage control at Cisco's AI summit. Called it "illogical" that AI would replace existing tools. Investors heard him. Then they kept selling. Because nothing says "logical market behavior" like pricing bitcoin at $100K three months ago.

Here's the kicker: Big Tech is spending a combined $650 billion in 2026 to build AI systems that are simultaneously destroying the valuations of the software companies those systems will replace.

They're building the gun. Pointing it at their own ecosystem. And calling it innovation.

Sound familiar? It should. It's every platform play ever, except this one costs more than Sweden's GDP.

About 100 S&P 500 companies reported last week. Nobody cared about 97 of them.

The spotlight, and the market's full-body anxiety, landed on the mega-caps and their capex numbers. Which at this point doesn't read like corporate strategy. They read like a dare.

Alphabet beat earnings estimates. Decisively. Then announced $175 to $185 billion in 2026 capex, roughly $60 billion above analyst expectations. Stock plunged 7%. Clawed most of it back. Finished Wednesday down ~2%. The financial equivalent of acing the interview and then telling the hiring manager you plan to burn through their entire budget by March.

Amazon delivered the same one-two punch on Thursday. Top and bottom line beats. The crowd goes wild. Then: $200 billion in planned 2026 capital spending. Shares dropped 5.5% Friday during a rally. That's how bad it was. The market was going up, and Amazon still went down. Like tripping on a moving walkway.

Microsoft, which reported the prior week, kept sliding. Down nearly 5% on Thursday alone. Investors are now openly asking whether AI adoption will cannibalize traditional software revenue rather than enhancing it. Spoiler: yes. That's what disruption means. Look it up.

The Vanguard Mega Cap Growth ETF dropped 3.1%. The market-weighted S&P 500 underperformed its equal-weighted counterpart on multiple days.

Translation: investors believe in AI. They just don't believe these companies will earn the money back. It's the corporate equivalent of your friend's kitchen renovation. Twice the estimate, no countertops, and the contractor just asked if you've "considered gutting the bathroom too."

While tech was having a public nervous breakdown, value stocks threw the best party of the year.

Nobody invited tech. Nobody missed it.

Consumer staples surged 6.0%. Walmart, Walmart, crossed the $1 trillion market cap threshold. Up 14.6% year-to-date. Let that land. The sexiest trade in American markets right now is the company that sells Great Value mac and cheese and bulk toilet paper. We live in extraordinary times.

PepsiCo beat estimates. Jumped nearly 5%. Hershey delivered a beat-and-raise quarter. Gained 9%. Even the sleepy staples shelf looked like a growth rack. Your boring uncle's portfolio is outperforming your Cathie Wood fan fiction.

Industrials (+4.7%) rode airline strength. United gained nearly 5% Monday on collapsing oil prices and another 9%+ on Friday. Energy (+4.3%) rebounded mid-week after U.S.-Iran diplomatic talks stalled and crude climbed back to $65.13. Materials (+3.5%) joined the rotation. Smurfit Westrock and Amcor posted 8%+ gains after solid earnings.

This wasn't sector rotation. This was the market looking mega-cap growth dead in the eye and saying, "We're seeing other people. And honestly? The staples aisle texts back."

Bitcoin had the kind of week where you move the Coinbase app into a folder labeled "Recipes" and pretend you're into sourdough now.

The cryptocurrency plunged to $61,000 on Thursday. Lowest since October 2024. A 45% drawdown from its all-time high. Forty-five percent. Then it bounced to roughly $70,000 by Friday. Volatile enough to give your cardiologist billable hours.

The collateral damage was brutal. Michael Saylor's Strategy (MSTR) cratered 17% Thursday. Coinbase dropped 13%. Robinhood shed nearly 10%. The financial sector took shrapnel.

Here's the uncomfortable part. The "digital gold" narrative, the inflation hedge story, is dead. This was a week of geopolitical uncertainty, dollar anxiety, and inflation fear. The exact conditions where crypto was supposed to shine. Instead, it performed like a leveraged tech bet in a leather jacket. Same volatility. Same drawdown. Worse PR.

Treasury Secretary Bessent helpfully noted the government wouldn't ride to crypto's rescue. Thanks, Scott. Really needed that confirmation while we were down 45%.

Friday's bounce offered relief. But the message was clear: even with a friendly White House and regulatory allies, bitcoin can't find a floor. Turns out "decentralized" also means "you're on your own." Enjoy that freedom.

Underneath all the earnings noise, the labor market quietly sent signals that should make you uncomfortable. If you're paying attention. Which, let's be honest, most people aren't.

ADP private payrolls: 22,000. Consensus was 43,000. Barely half. December JOLTS job openings: 6.542 million versus the 7.25 million expected. A clean miss. Weekly initial claims jumped to 231,000, the highest since early December. Challenger, Gray & Christmas reported January layoff plans at their worst level since 2009. Nearly 110,000 cuts announced.

Amazon alone announced 16,000 job cuts. They called it a "delayering initiative." Translation: we bought the AI, and now we need fewer of you.

The cognitive dissonance was real. Monday's ISM Manufacturing at 52.6% broke an eleven-month contraction streak. The market celebrated. Then every labor report for the rest of the week said the economy is more tired than it looks. Both things were apparently true. At the same time. In the same economy.

The University of Michigan consumer sentiment reading came in at 57.3, above consensus. But the details told a K-shaped story: wealthy consumers with stock portfolios felt great. Everyone else? "Dismal levels."

Two economies. One country. The top half is arguing about capex on a Bloomberg terminal. The bottom half is shopping at Walmart.

And Walmart's stock is the one going up. Think about that.

Because earnings week apparently wasn't dramatic enough, Elon Musk announced Monday evening that SpaceX would merge with xAI. Combined valuation: $1.25 trillion. Positioned ahead of a widely anticipated IPO.

The pitch? Space, AI, and data are "naturally linked." Vintage Musk. Ambitious. Slightly hand-wavy. Priced entirely on vibes and the assumption that one man's shower thoughts are worth more than most countries' GDP.

$1.25 trillion. For a company whose primary AI product is a chatbot that argues with strangers on X. The market nodded along. Nobody blinked.

Meanwhile, in a juxtaposition that writes its own editorial, Jeff Bezos's Washington Post announced it would eliminate a third of its staff. 300+ newsroom positions. Gone. In the same week, Amazon lavished money on a documentary about Melania Trump. Journalism dies. Content thrives. Welcome to 2026.

Disney also reported a messy quarter. Stock fell 7% on cost overruns and profit misses. The silver lining: theme parks chief Josh D'Amaro is the likely successor to Iger as CEO. Because if there's one thing Disney knows, it's how to sequel a franchise until it works. Or doesn't. Usually doesn't. But they'll try.

Prediction markets had a monster week. Polymarket's cumulative trading surpassed $33 billion, $12 billion of that in January alone, fueled by Intercontinental Exchange's $2 billion investment, valuing the platform at $9 billion.

The hottest bets tell you where smart money sees risk:

The broader prediction market mood mirrors equities: cautious but not panicking. Hedging but not hiding. One eye on the exit. One eye on the dip.

That's not a strategy. That's just how we live now.

Gold had one of its most dramatic weeks in modern memory. And for an asset class whose entire brand is "stability," that's a problem.

After plunging roughly 9% the previous Friday on Kevin Warsh's Fed chair nomination, gold dropped to $4,700 on Monday. Then Tuesday happened. A $282 rally to $4,935 per ounce, the largest single-day gain since 2008. Thursday: back to $4,815 as CME raised margins for the sixth consecutive time. Friday: recovered to roughly $4,944.

That's a range that would make most meme stocks blush. For gold. The safe haven. The thing you buy so you can sleep at night.

Gold is up nearly 69% year-over-year, driven by geopolitical fear, fiat debasement anxiety, and central bank buying. The safe-haven credibility is being tested by the very speed of its ascent. As one analyst put it: "breathtaking and profoundly scary."

When your safe haven needs its own safe haven, diversification isn't a suggestion. It's triage.

Gold is the designated driver who just did three tequila shots and is weaving between lanes, insisting he's "totally fine, bro." You're still in the car. Seatbelt on. Praying.

The housing market did what the housing market always does: nothing meaningful, but with extra steps.

Mortgage rates ticked up modestly. 30-year fixed averaged 6.11% per Freddie Mac, up 1 basis point. Bankrate showed 6.26%. Both below last year's 7%+ levels. Both stubbornly above the threshold that would actually unlock demand. It's the rate equivalent of "close enough," which in housing means "not close at all."

MBA mortgage applications fell 8.9% for the second consecutive week. Buyers remain hesitant. Shocking no one.

Policy glimmer: Politico reported the House is planning a vote on legislation to increase housing supply. Homebuilder stocks rallied. Because if there's one thing the housing crisis needs, it's a vote on legislation. Problem solved.

Fannie Mae projects rates drifting toward 6% through 2026. J.P. Morgan expects flat home prices, with an estimated 1.2 million-unit shortfall. Affordability may inch forward. The structural shortage isn't going anywhere.

For anyone waiting for rates to drop enough to feel excited, it's like waiting for the grocery store to mark down avocados. It technically happens. Never as much as you need. And by the time it does, you've already bought the off-brand guacamole, moved back in with your parents, and built a personality around renting.

Retail investors spent the week oscillating between euphoria and existential dread. Sometimes in the same session. Sometimes in the same sentence.

Monday: ISM blowout. Risk-on vibes. Reddit and fintwit buzzing about buying the dip in tech. "Buying the dip," a phrase that at this point should come with a mandatory 48-hour waiting period and a signed liability waiver.

Thursday: Bitcoin below $64K, software in freefall, VIX above 21. The mood shifted to gallows humor and screenshots of red portfolios captioned "this is fine" dot jpg. The internet processed its grief in memes. As is tradition.

Institutional money told a different story. Blue Owl's co-CEO publicly called the selloff "panic-driven, not reality-based." Which is what institutional money always says. Right before it quietly rotates into Treasuries. Wall Street desks framed the mega-cap capex plans as bullish for semis and AI infrastructure even as the stocks behind those plans cratered. Bullish for the concept. Bearish for anyone who owns it. Classic.

The UMich sentiment data nailed the mood: if you own stocks, the vibes are warm. If you don't, the economy feels cold. And if you own both stocks and crypto? The vibes are chaotic neutral with a chance of bourbon at 2 p.m.

This week was an expensive tasting menu where the appetizers were exquisite (Monday's manufacturing surprise, a Dow pushing toward history), but the main course arrived cold, oversized, and came with a $650 billion check nobody ordered.

Friday's dessert rally was rich. But your palate remembered Thursday's bitterness. You left the restaurant full, suspicious, and quietly Googling the Yelp reviews for next week.

The sommelier recommended gold. You ordered it. It arrived shaking. You drank it anyway.

The first full week of February will be remembered for the moment the Dow closed above 50,000. A milestone that should've dominated the week. Instead, it played second fiddle to a tech reckoning, a crypto washout, and the loudest rotation into value stocks in years.

What made this week unusual wasn't any single event. It was the crosscurrents. Manufacturing is expanding while hiring is contracted. Mega-cap tech is beating earnings while getting punished for spending plans. Gold is acting like a meme stock while bitcoin, the original meme asset, fell through the floor.

The market ended the week roughly where it started. That's both anticlimactic and perfectly fitting. Like running a marathon only to realize you're standing in your own driveway. Your Garmin says you burned 12 calories. Your knees say otherwise.

The week's clearest takeaway: leadership in 2026 is genuinely up for grabs. The old assumption that owning the biggest tech names is a cheat code has been replaced by something messier, more rotational, and ultimately more interesting.

The cheat code still exists. It just costs $200 billion in capex. Nobody's sure it unlocks anything. And the terms of service changed while you were reading the patch notes.

Welcome to the new market. Same chaos. Better snacks.